Scandals Republicans Like

The decision by the I.R.S. to flag for special review applications for tax-exempt status from organizations with “Tea Party” or “patriot” in their names has provoked sustained outrage on the right for nearly a year.

Take the following American Thinker article by Karin McQuillan, which was published on March 7: “Democrats Unleash the I.R.S. Tyrant.”

“Democrats don’t actually want a free country any more, where others can disagree and sometimes win,” McQuillan writes. “Opposition is an outrage to these new Democrats. They think the first black president has the right to rule unopposed.”

“This is fascism,” McQuillan concluded. “Democrats want it.”

Even Peggy Noonan, writing in The Wall Street Journal, knows a conspiracy when she sees one: “We know we haven’t gotten near the bottom of the political corruption of that agency. We do not know who ordered the targeting of conservative groups and individuals, or why, or exactly when it began. We don’t know who executed the orders or directives. We do not know the full scope or extent of the scandal.”

Noonan is being too modest. In her heart — as her prose clearly reveals — she does know where the source of this corruption can be found: sitting in the Oval Office.

But what if the truth is more pedestrian: that the I.R.S. is simply not adequately funded to do its job and that Republicans are the ones who have kept the agency underfunded?

Republican zeal for reducing the size of government, particularly its tax collecting apparatus, has left the I.R.S. ill-equipped to perform its functions, one of which is to review applications for tax-exempt status from groups claiming to be “social welfare” organizations under section 501(c)(4) of the Internal Revenue Code.

Transcripts of hearings and witness interviews with committee staff that are available on the House Oversight and Government Reform Committee website show that beginning in 2010, the I.R.S. bureaucracy, faced with a surge of requests for tax-exempt status, was hard pressed to discern potentially suspect applications. Under intense pressure to meet I.R.S. production targets, civil servants — including registered Republicans — adopted the practice of flagging phrases like “tea party” to speed identification of applications requiring careful examination.

At a hearing on May 22, 2013, Representative Gerald Connolly, a Democrat from Virginia who is a member of the House Oversight Committee, observed that executive branch and congressional investigations into I.R.S. abuses were being conducted “in a vacuum. You know, some sinister plot was hatched by normally kind of, you know, colorless bureaucrats in Cincinnati to get somebody for their political beliefs.”

Was there, Connolly asked, “a triggering event that flooded the I.R.S. with new applications?” Answering his own question, Connolly said: “The triggering event is the Supreme Court ruling, Citizens United. The number of applications between 2009 and 2012 for a 501(c)(4) doubled from 1,751 to 3,357.” Citizens United was decided on Jan. 21, 2010.

Connolly continued by asking witness Douglas Shulman, a Republican who had been I.R.S. commissioner from March 2008 to November 2012, “Were you flooded with resources after Citizens United, to deal with the volume?” Shulman succinctly replied, “No.”

Separately, on June 6, 2013, committee staff interviewed an I.R.S. manager who identified himself as a conservative Republican, but whose name was redacted by committee staff. The manager complained repeatedly of the “daunting” pressures affecting his office as he and his subordinates struggled to process stacks of post-Citizens United applications for tax-exempt status: “And so they really didn’t have time to be doing a whole lot of other things than saying ‘yes, yes, yes, yes. No, this isn’t’ here. Or this needs further – like I don’t see enough information here.’ ”

At another point, the unidentified I.R.S. manager testified: “I mean, these cases we are going through — I don’t want to sound as if, you know, that — it’s just that the volumes. I mean, I hope you can appreciate the volumes we are dealing with here.”

His sense of “daunting” pressure comes through as he describes, in strikingly confused testimony, the first Tea Party case brought to him by a subordinate: “We’re talking about an organization, and this one was applying for c4, and they were a social welfare organization, but part of these – it ended (sic) to be mentioned of potential political activity. And so in itself, on a 501(c)(4), that’s not prohibited, but it’s not real clear as to how much political activity a 501(c)(4) public organization can participate in.” Got that?

The manager explained that the workload required him to “elevate that issue to my area manager” and that, in turn, set in motion the I.R.S. machinery that resulted in a directive intended as a time saver — a “Be On the Look Out,” or BOLO order for applications for tax-exempt status that contained the words “tea party” or “patriot.”

The I.R.S. appropriation has gone up during periods of Democratic control and down when Republicans have controlled at least one branch of Congress

Democrats won the House in 2006. From 2007 to 2010, the I.R.S. budget grew from $10.8 billion to $12.4 billion. Since 2010, the I.R.S. budget has been cut to $11.3 billion in 2014.

On Feb. 5, John Koskinen, the I.R.S. commissioner, described the effect of these cuts to the Way and Means Committee. “No challenge facing our agency is greater than the significant reduction in funding that has occurred over the last several years,” he said. “I am deeply concerned about the ability of the I.R.S. to continue to fulfill its mission if the agency lacks adequate funding. Our current level of funding is clearly less than what the agency needs.”

In fiscal year 2012, enforcement collections were $53.3 billion, down by $4.2 billion from four years earlier, and $5.9 billion less than “the high point of $59.2 billion in F.Y. 2007,” he said.

The reason for the drop, Koskinen noted, was “a decline in the number of returns audited. The I.R.S. audited the returns of approximately 1.4 million individuals in F.Y. 2013, down 5 percent from F.Y. 2012 and the lowest level since 1.39 million audits in F.Y. 2008. The audit coverage rate — the number of audits divided by the number of tax returns — fell below 1 percent to 0.96 percent in F.Y. 2013, the lowest level since F.Y. 2006.”

Koskinen observed that cuts in agency funding have reduced audits of corporations and of wealthy citizens: “Audits of high-income individuals – defined as those with $1 million or more in income – fell 3.7 percent as well last year. The I.R.S. examined approximately 61,000 business returns in F.Y. 2013, down 13 percent from F.Y. 2012.”

Republicans are aware of what happens to tax collections from the rich when the I.R.S. budget is cut and seem happy to live with those consequences.

The continuing effort of House Republicans to characterize the I.R.S.-Tea Party debacle as an example of a Democratic administration harassing conservative independent expenditure groups ignores the genuinely deleterious effects of slashing the federal tax collection budget.

Similarly, the House Oversight Committee has been relentless in its efforts to blame the Obama administration for the Sept. 11, 2012, terrorist attack on the American diplomatic mission in Benghazi, when Ambassador Christopher Stevens and three others were killed. Committee Republicans have done so despite their own record of repeatedly voting to cut spending on security for state department personnel.

If Republicans regain control of the Senate and maintain or strengthen their hold on the House in November, there will be a large bloc in the Capitol Hill wing of the Republican Party — those who thrive on conducting investigations of their political adversaries — that will be perfectly content to allow Democrats to win the White House in 2016.

Given the political reality that it’s more appealing to lob grenades from the outside than to stand by a president on the receiving end, a contingent of Republicans may privately root for the opposition at the top of the ticket.

When the House Oversight Committee was controlled by Republicans during the Clinton administration, for example, it produced a bonanza of publicity and attention. The committee conducted hearings and investigations into the activities of the administration — probes that cost $35 million, produced 1,052 subpoenas and uncounted headlines.

In contrast, it’s no fun serving on an oversight committee when your own party is running the executive branch. The years when Republicans controlled the House and White House, 2001 to 2007, were a public relations disaster for the Oversight Committee. The panel pointedly avoided taking on the Bush administration despite a plethora of scandals: abuses in the Abu Ghraib prison, evidence that the claim Iraq possessed weapons of mass destruction was false, Jack Abramoff’s illicit lobbying and the failure of the administration to respond to Hurricane Katrina.

By the end of 2005, the committee had issued the Bush administration a total of three subpoenas, all on relatively noncontroversial matters.

After a steady diet of front page coverage during the Obama administration, what, then, could more attractive to a congressman in the mold of Darrell Issa than four or even eight years with Hillary Clinton in the White House? Conversely, what could be more depressing to Issa than Scott Walker, Jeb Bush or Chris Christie at 1600 Pennsylvania Avenue?